Europe has approved the prime ministers plans to get public finances back in order and prevent a financial disaster
The European Commission has backed Greece’s plan to boost tax revenue and cut public spending in an effort to avoid financial meltdown, reported the Financial Times.
Last year Greece’s public sector deficit reached almost 13% of GDP. The country’s finance ministry is expected to unveil a new tax system aimed at increasing revenues by around 10% a year, according to the FT. The government has also pledged to raise the retirement age and a freeze on public sector wages.
In an emergency TV address on Tuesday night, George Papandreou, Greece’s prime minister, said: “We have to stop the country from falling over a cliff.”
Under a three-year plan, the Greek government seeks to cut the national budget deficit to less than 3% of GDP by the end of 2012, according to the FT.
The EU warned that Athens’ plan did not mean Greece was out of the woods yet. Commission president, José Manuel Barroso, said Greece’s proposal was “feasible but subject to risks”, said the FT.
“Brussels’ backing provides some relief for Athens and could ease market nervousness about the fragility of public finances in Greece and other eurozone countries – including Portugal, Spain and Ireland – which also have soaring deficits,” said the FT story.
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